US Supreme Court's conservatives flex muscles to curb regulatory agencies

By Andrew Chung

WASHINGTON (Reuters) - The U.S. Supreme Court's conservative majority trained its legal firepower this term on curbing federal regulatory authority, cementing its critical role in a longstanding effort by business interests and others to defang the "administrative state."

The court's sweeping rulings have limited the federal government's power to regulate everything from stock trading to pollution, even as the justices opted not to further curtail abortion rights or expand gun rights under the U.S. Constitution's Second Amendment ahead of the Nov. 5 presidential election.

The court's nine-month term comes to an end on Monday. It issued a major ruling on Friday, with its six conservative justices in the majority and three liberals in dissent, that overturned a 1984 precedent that established an important principle in administrative law known as "Chevron deference." The doctrine had called on courts to give deference to government agency interpretations of federal law.

The outcome - eagerly sought by business and conservative groups - will make it easier for judges to second-guess actions by U.S. agencies, empowering legal challenges to regulations in the federal sphere such as air and water quality, food and drug safety, employment standards and investor protection.

On Thursday, the conservative majority ruled that enforcement actions seeking penalties for fraud that are handled in-house by the Securities and Exchange Commission instead of in federal courts violate the Constitution's Seventh Amendment right to a jury trial. The ruling could reverberate through other agencies, frustrating their enforcement of regulations as well.

"I would say that this area of the law is the clearest one today where there is a 6-3 divide among the justices of the court," said attorney Misha Tseytlin, who has argued cases at the court.

Friday's Chevron deference ruling "is the most significant administrative law decision in decades from the U.S. Supreme Court," Tseytlin added. "That decision will fundamentally change not only litigation over agency rules, but also the manner in which agencies approach their rulemaking processes."

The court has pared back agency power in other cases in recent years, including curbing the authority of the Environmental Protection Agency to reduce carbon emissions from power plants in 2022. In that one, the court embraced the so-called "major questions" doctrine favored by conservatives, giving judges broad discretion to invalidate executive branch actions unless Congress clearly authorized them.

The conservative majority has "continued to make limiting the power of administrative agencies one of its highest priorities," said Nicole Saharsky, also a Supreme Court litigator.

"From the major questions doctrine, to limits on agencies' power to adjudicate, to the elimination of Chevron deference, the court has made it much easier for regulated parties to challenge agency actions," Saharsky added.

Legal scholars debated how far the rulings undermined the power of regulatory agencies.

Abner Greene, a Fordham University School of Law expert in regulatory law, said the court has taken "another step toward dismantling the federal regulatory state" by limiting the ability of Congress to use agencies to "develop federal policy over time and in response to complex circumstances."

George Mason University law professor Ilya Somin, however, said that while it is clear the justices have "suspicion of regulatory bureaucracies" they are "very far from destroying the administrative state or even ending all judicial deference to it."

The court upheld in May the Consumer Financial Protection Bureau's funding mechanism in a challenge brought by the payday loan industry that represented an existential threat to the agency. The justices are expected on Monday to decide one more case involving a North Dakota convenience store's challenge to debit card "swipe fee" regulation issued by the U.S. Federal Reserve.

GUNS AND ABORTION

Two major cases on their docket gave the court's conservatives the chance to further curtail access to abortion. The justices declined to do so - but also did not resolve the underlying legal questions, leaving the door open for those issues to return to the Supreme Court in the future.

One case involved a bid by anti-abortion groups and doctors to restrict access to the abortion pill. The justices decided that these particular challengers lacked the necessary legal standing to pursue the case. The court also declined to decide another matter involving the enforcement of Idaho's strict abortion ban in medical emergencies, instead dismissing the case.

The court's conservative majority in 2022 overturned the 1973 Roe v. Wade landmark that had recognized a constitutional right to abortion and legalized the procedure nationwide.

The justices also this term declined to further expand gun rights under the Constitution's Second Amendment right to "keep and bear arms" in a case involving a challenge to a federal law that bans domestic abusers from having guns.

The ruling suggested limits to the new test the court had announced in a 2022 ruling that made it easier to challenge gun control measures, requiring them to be consistent with the nation's "historical tradition of firearm regulation."

Somin said the term's abortion cases show that for many of the conservative justices "it's clear it's not necessarily their view that they want to restrict abortion at all costs."

He also noted that in the domestic abuse gun case, the challenger was not a sympathetic figure. "The conservative justices were reluctant to say the right goes as far as to even cover this case, but that doesn't tell us much about what they would do in less extreme cases," Somin said.

In another gun-related case that did not involve the Second Amendment, the court declared unlawful a federal regulation banning "bump stock" devices that enable semiautomatic weapons to fire rapidly like machine guns, suggesting instead that Congress step in.

The court already has another firearms-related case set for review during its next term, which begins in October, involving a challenge to a federal regulation targeting homemade "ghost guns." It could take up, as early as Monday, other Second Amendment challenges to bans on gun possession by non-violent felons and users of illegal drugs, and on assault-type rifles.

In another major case set for next term, the justices are set to decide the legality of Republican-backed state bans on gender-affirming medical care for transgender minors in a case involving a state law in Tennessee.

(Reporting by Andrew Chung; Editing by Will Dunham)